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Dec 31, 2020
Kennametal Q2 2021 Earnings Report
Kennametal's financial performance improved with increased sales and margin, driven by simplification efforts and recovering demand.
Key Takeaways
Kennametal reported a strong sequential sales growth of 10% in Q2 2021, driven by improving demand in Transportation and General Engineering end-markets. The company's simplification/modernization initiatives and cost control measures led to margin improvement and strong free operating cash flow. EPS was $0.23, compared to a loss per share of $0.07 in the prior year quarter, and adjusted EPS was $0.16, compared to adjusted EPS of $0.17 in the prior year quarter.
Sales increased 10 percent sequentially, driven by stronger demand in Transportation and General Engineering.
Simplification/modernization initiatives yielded $23 million in incremental benefits, up 117 percent year-over-year.
Operating income improved to $19 million, compared to an operating loss of $48 million in the prior year quarter.
The company is gaining traction in Metal Cutting fit-for-purpose applications globally with new and existing customers.
Revenue by Geographic Location
Forward Guidance
Assuming no significant economic shutdowns from COVID-19, Kennametal expects Q3 sales to modestly outpace normal seasonal trends and to have positive free operating cash flow for the full year.
Positive Outlook
- Q3 sales are expected to modestly outpace normal seasonal trends.
- Positive free operating cash flow is expected for the full year.
- Transformation is well underway.
- The company has permanently improved the cost-structure.
- The company is well positioned to gain market share and deliver better profitability as end-markets continue to improve.
Challenges Ahead
- Overall global market conditions remain unpredictable.
- Visibility into the Company's primary end-markets remains limited.
- The duration of the COVID-19 pandemic and its impacts on our business operations, financial results and financial position and on the industries in which we operate and the global economy generally
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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